Re: surge in U.S. corporate profits

From: Rakesh Bhandari (rakeshb@STANFORD.EDU)
Date: Thu May 20 2004 - 12:35:12 EDT

>On Thu, 20 May 2004, Rakesh Bhandari wrote:
>>  The profit surge also coincides with the post 2002 depreciation of
>>  the dollar, almost 30% against the euro though only 12% against a
>>  trade weighted basket of currencies...
>Yes.  Another perspective on the course of profits is the Kaleckian

I don't think I was defending a Kaleckian perspective, but it is
useful here (for example I was trying to suggest some of the profit
increase may be the result only of an increase in the dollar value of
profits earned in other currencies). But the Kaleckian perspective
does two things:
a. indicates that profits have been maintained to some extent by
workers drawing down on savings as firms "downsize"
b. it points to the central importance not of an increase in s/v or
dollar depreciation but the extraordinary federal deficits in the so
called recovery.

Why have long term interest rates not moved strongly upward with such
deficits and the depreciation of the dollar? I don't think an answer
can be given without consideratin of foreign capital inflows--hence,
my interest in that recent piece by Dumenil and Levy.

Again to understand movements in US profitability it's limited (if
not arbitrary) to look primarily for changes in purely national
variables, e.g. changes in the unproductive to productive labor ratio
within the territorial boundaries of the US.

The understanding of US capitalism requires a global analysis, one
that cannot accept the limits of what Michael Billig calls banal


>profit = investment + budget deficit + net exports - workers' saving
>From this point of view, comparing 2003:4 with the previous profit
>peak in 1997:3, we have (all in current billions of dollars):
>                             1997:3  2003:4  change
>fixed private investment    1347.0  1756.0  +409.0
>federal deficit               35.0   417.9  +382.9
>These both boost profit, as does a fall in personal saving of 63.9.
>Over the same period the U.S. current account balance has fallen by
>97.6, a relatively slight offset to the big boost from private
>investment and federal deficit spending.

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